Cutting exports to 3.5 or 3 is the proposal of the most intense environmental activists, the "Responsible Exports Scenario" that they have been demanding be analyzed in the EIS/EIR and the Delta Plan for years. The State has ignored them, and yet the DWR Director is making public statements that this is in fact the outcome if the Tunnels are not built - never mind what it says in their EIR/EIS. Not even the most extreme environmentalists are asking to shut-down the facilities all together, and yet the DWR Director suggests it will happen if we don't build the tunnels.

Back when the Bay Delta Conservation Plan was seeking 50-year regulatory assurance, there was some justification for using an alternative no-tunnel baseline when evaluating the project's return on investment to water exporters (but not for statewide benefit-cost analysis as the regulatory assurance was not risk-reduction, it was risk-shifting from exporters to upstream users, taxpayers and the environment). With the regulatory assurance now eliminated from the project, how can Cowin keep making this argument to the exporters? As the article notes, many of them are unconvinced by the increasingly hard-to-believe sales pitch.

Director Cowin is in a bind. The State must use a different no-tunnel scenario for its economic case than its environmental case, but it is this constantly changing story that causes immense distrust in both the agricultural and environmental community. It is also going to cause major problems for the project when the EIR/EIS is litigated. I suppose he has no other choice, as long as the Governor is still strongly pushing the delta tunnels.

The tunnels are simply a bad project. A good project can get a passing grade using the same no-project baseline scenario for both environmental and economic analysis. The dramatically shifting no-tunnel baseline violates basic principles of objective scientific and economic analysis, and contradicts the statements that the project is governed by the "best available science".
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The rest of the Sac Bee article features quotes from the reporters' tour of the Central Valley asking various farm leaders about their willingness to pay for the tunnels. Kasler and Sabelow summarize the responses as "The answer, so far, is a very qualified "yes." That is an accurate description of their public statements, but there are good reasons to believe that their assessments and their statements are a lot more negative when there are no reporters in the room. The reporters should stay on this story and dig deeper.

Finally, I was moved by this quote form Jim Beck, general manager of the Kern County Water Agency.

"Think about the magnitude of that decision for these farmers and their families. It's the most significant decision most will make in their careers."

I honestly feel for these farmers. They want action and have historically supported big water infrastructure. But they have never had to finance anything close to this magnitude, and they are now under tremendous political pressure to support a project that is bad for them economically and will especially harm their kids and the next generation that is stuck with the bill.

Like many others, I believe that the footprint of Central Valley agriculture will shrink by 10% or more in the coming decades due to dwindling supplies of ground and surface water. But I am also optimistic, and think Valley agriculture will continue to grow more profitable overall even as it uses less land and water. The tunnels will make Valley agriculture less profitable in a desperate attempt to stave-off a loss of acres.

At the EIR/EIS water yields, the tunnels will keep 60,000 marginal acres in production in the long-run. Is that worth $10 billion (the ag share of the tunnel bill)? That's $160,000 an acre. It doesn't make sense - even with $4 almonds. Even if you use DWR's poorly justified, high-water yield scenarios, it is $30,000 an acre, and farmers are still better off fallowing the most marginal land.

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About Me

I am Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law.
My professional areas of expertise are regional economics (such as labor and real estate markets), and environmental economics. Much of my research has been on the economic impacts of environmental policies such as the Endangered Species Act, sea-level rise, climate change, and land use. Depending on the facts, these studies sometimes favor environmental viewpoints and sometimes business points of view.
This is a personal journal and reflects my thoughts at a particular time. I am open to changing my mind in light of new facts and better arguments.